‘Game-Changing’ New Research on Prolific Permian Basin Estimates 60 Billion to 70 Billion Barrels Remain, IHS Markit Says

HOUSTON–(BUSINESS WIRE)–Energy researchers at IHS Markit have completed the first, three-year phase of a massive Permian Basin research project that models and interprets the giant basin’s key geologic characteristics to better estimate its remaining hydrocarbon potential, and initial results indicate the giant basin still holds an estimated 60 billion to 70 billion barrels of technically recoverable resources.

“To our knowledge, this is the most ambitious, comprehensive Permian Basin geologic interpretation analysis and modeling project of its kind to date, but we’re not done yet. We are already at work on the second phase of the Permian Basin analysis, which is to further delineate the various Wolfcamp sub-benches.”

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To conduct this new analysis, researchers used the IHS Markit historical well and production database that includes more than 440,000 Permian Basin wells, and a new proprietary software tool that, for the first time, enables them to leverage interpreted formation ‘tops’ data to identify accurate formations for completion intervals on hundreds of thousands of wells. These results significantly alter the understanding of the Permian Basin’s resource potential, according to new analysis from IHS Markit(Nasdaq: INFO), a world leader in critical information.

“When a geologist looks for new oil reserves, we typically go back to geologic targets where we know oil was targeted and produced previously, and in a well file, we call those targets the producing or completion formations,” said John Roberts, executive director, global subsurface content operations at IHS Markit. “This producing formation data is a critical element in assessing and correlating future drilling and production activity, but since that information is highly competitive, many operators have historically under-reported that information, which has created much ambiguity in the data.”

Roberts, along with Prithiraj Chungkham, director of unconventional resources at IHS Markit, co-authored The Permian Basin Interpreted in 3D: The IHS Markit Permian Basin Unconventionals Kingdom Geology Project.

“Using a new technology we developed, we’ve leveraged our proprietary IHS Markit interpreted formation-tops data to identify accurate formations for completion intervals on hundreds of thousands of wells, and the results change the game for this basin and for geologists’ interpretations,” Roberts said. “It has significantly changed our understanding of the extent of many formations in the Permian Basin and the potential of those formations to yield additional hydrocarbons.”

Roberts said the IHS Markit team spent thousands of hours and more than three years building the technology and using it to ‘rigorously and methodically’ update the company’s hundreds of thousands of historical well and production records that cover the Permian Basin’s nearly 100-year history.

“We’re a mix of geologists, private detectives and data scientists who have new tools that now enable us to re-examine the historical data and completely reassess the potential of this mature, giant basin in a 3D model,” Roberts said. “I’m one of more than 60 geologists who have been recording and correlating formation ‘tops’ data for the Permian Basin for over 30 years, so this represents a lifetime of work for many of us, and it’s exciting to finally see the pieces of the puzzle fall into place. For a scientist, it’s like looking through a more powerful microscope and suddenly seeing something clearly for the first time—it is very exciting,” Roberts said.

The Permian Basin, which is a mature hydrocarbon basin located primarily in west Texas and extending into southeastern New Mexico, has produced more than 39 billion barrels (cumulative) of oil since it first began production in the 1920s, reaching a previous production peak in 1973. As conventional oil production in the play declined steadily during the following three decades, many in the industry thought the Permian’s best days were behind it, but unconventional drilling and completion technology changed the game in the 2000s. This advance made possible the extraction of unconventional shale resources that were previously uneconomic to produce, and changed the view of geologists, who, for decades, had bypassed these less desirable targets in favor of conventional reservoirs.

With the onset of horizontal drilling and new completion technology during the past decade, the production decline in the Permian has been reversed and the basin is on track to soon eclipse its previous peak, according to IHS Markit.

“The Permian Basin is America’s super basin in terms of its oil and gas production history, and for operators, it presents a significant variety of stacked targets that are profitable at today’s oil prices,” Chungkham said. “In this analysis, we’ve modeled and interpreted more than 70 formations and benches across the Permian Basin and have delivered them in a work-station-ready 3D format, so Permian operators or new-entrants can fast-forward their analysis. In particular, the tremendous improvement in assigned-producing formations adds significant detail and dramatically changes the views of the basin and our understanding of where future hydrocarbon potential exists, allowing for faster economic evaluation of acreage and productive potential. Based on our IHS Markit analysis, a previously undiscussed opportunity for production may be from the tight, non-continuous plays produced through short-lateral wells and low-volume fracking. This offers lower risk, improved upside potential and ultimately, lower recovery costs, which is good news for operators,” Chungkham said.

Given the concerns about a potential crude supply shortage in the medium term, understanding the economic limits of both geography and geology in the Permian is key for operators and investors, Roberts said. Independently, such in-depth data interpretation and analysis can be extremely time consuming and expensive, which has driven demand for this interpreted, 3D-modeled work-station-ready dataset.

“It enables operators to fast-track their existing interpretation efforts in the play or to enter new parts of the play,” Roberts said. “To our knowledge, this is the most ambitious, comprehensive Permian Basin geologic interpretation analysis and modeling project of its kind to date, but we’re not done yet. We are already at work on the second phase of the Permian Basin analysis, which is to further delineate the various Wolfcamp sub-benches.”

The Permian Basin Interpreted in 3D: The IHS Markit Permian Basin Unconventionals Kingdom Geology Project contains a 3D geological model (IHS Kingdom™) of more than 70 geologic formations (from the Basement to the Upper Permian), built using IHS Markit proprietary interpreted tops data, which has been used to assign corrected producing formations for all producing wells. The project includes more than 440,000 updated wells, the interpreted tops, digital logs and allocated production data. It also contains various analytical data including zone attributes, GRID files and the results of analysis of 52 plays comprised of 11 shale (continuous type) and 41 stratigraphic-structural (non-continuous type). These analyses incorporate PRODFit™ (Producing Formation from Interpreted Tops), a new well-production database enhancement that is just now coming online and is being delivered to customers.